Textile And Clothing: Dig Deeper Structural Opportunities And Pay Attention To Leading Business Tenacity

1. The dominant track is outstanding.

Since the beginning of the year, the textile and garment industry has been affected by factors such as the downside of the economic environment. The basic performance of the industry is still relatively dull. In the 1-10 months, the sales volume of clothing industry increased by 2.8%, the growth rate slowed down 5.6pct compared with the same period last year. Specifically, the trend of differentiation between industries is still obvious. The track of sports apparel and children's wear still keeps relatively high growth level. At the same time, the electricity supplier and the low line market still show great vitality. Besides, from the perspective of the subdivision industry, the leading enterprises still show a more obvious growth toughness.

Two, incremental mining: focus on high visibility and new mode of electricity supplier to explore the sinking market.

Overall, the industry fundamentals in 2020 are expected to gradually stabilize in the promotion of consumption policy and the industry base effect, but differentiation will still be the main line. Structural incremental opportunities remain: on the one hand, sports and children's clothing and other high quality tracks are expected to have room for development under the catalysis of leading companies and the innovation of consumption concepts; on the other hand, the sinking market is still the main source of consumption increment, and the demand for three or four line cities is being further released under the impetus of the sinking of e-commerce channels.

Sports shoes and clothing and children's clothing two high boom track benchmarking international still has much room for development. At the same time, the new consumption characteristics displayed by consumers have become an important driving force for the continuous expansion of their market size. Among them, the strengthening of sports fashion trend helps sports brands accelerate the absorption of young consumers in the casual wear market, and children's clothing industry is expected to benefit from the full liberalization of the fertility policy in the future. Pay attention to Lining, Bi Yin and Semir.

The low line consumer market is still vast. With the development of the electronic business platform sinking strategy, the domestic brands with high cost performance will have larger development space. Antarctica, Kai Run, etc. can create cost-effective products through the industrial chain integration, and expand the new mode with the electricity supplier as the main channel. Enterprises are expected to continue to obtain sustained high growth kinetic energy in the subsidence.

Three, stock competition: pay attention to the operational toughness under the long term strength of the leader.

At present, the industry as a whole is still at a low level of prosperity, and the leader of the subdivision plate with strong comprehensive strength has shown a more obvious basic performance: 1. From the perspective of brand clothing, the focus is on the release of mid long term reform dividend through the positive effects of brands, products and channels in the past few years: Bosideng, Hai Lan and Song Li Si; 2, from the perspective of upstream textile manufacturing, the leading companies actively expand their production capacity to reduce costs and enhance their ability to resist risks, and can get a more efficient advantage in the trend of strong combination of industrial chains. In addition, the leading enterprises with strong internal strength have stronger performance elasticity in the opportunity to pick up the industry: Jiansheng group and Baron East.

Specifically, since the end of the last quarter of the industry accelerated downwards, our overall sales of 17 leading spinning and weaving companies focused on the spinning and weaving sector maintained a steady growth of about 10%, compared with the slowdown in overall revenue growth or even decline in the whole sector. On average, the growth rate was higher than 8.0pct. per quarter. In terms of performance, although the key companies have started to decline since the beginning of Q2, they are still better than the whole sector. In terms of other financial indicators, key companies also show advantages in terms of operational efficiency, especially in terms of profitability. From the gross margin, the gross profit margin of key companies is higher than that of the spinning and weaving service sector, and the gap is widening. In terms of the cost of the period, the cost rate of the key companies has been relatively low, mainly driven by a lower sales cost rate, and the financial cost rate has the same advantage. In terms of cash flow, the key companies also have relative advantages in general, and the net cash flow situation is obviously more stable than that of the spinning and weaving sector. In addition, in terms of operational capability, the days of accounts receivable turnover of key companies are lower, but the turnover time of inventory is even higher. Considering the difference of location and business characteristics of each industry, it is expected that the distribution of sub sectors of key companies will be caused to some extent.

Four, investment strategy: seize the opportunity of increment and pay attention to the toughness of leading enterprises.

Looking forward to 2020, we believe that the industry as a whole is expected to gradually stabilize under the promotion fee policy and so on, but differentiation is still the main line: first, sports and children's clothing are still the main support for the two track races. Meanwhile, the competition is optimizing and the leading companies are expected to achieve rapid growth. Two, the low line market will still be the main potential of domestic channels. Relying on the new marketing channel of e-commerce, it will more effectively help brands achieve the sinking of the incremental passenger group. Three, the leading companies that have accumulated a lot of deep internal strength and have strong operational toughness will still have great performance and valuation flexibility in anticipation of the industry's warmer growth. On the whole, we suggest that we should focus on Semir clothing, Lining, bio, and Antarctica.

Risk warning. The consumption environment continues to slump, the industry competition structure deteriorates, and the performance of the leading companies is not as good as expected.

Links: stock analysis

Semir costumes (002563)

The leading position of children's wear and the advantages of e-commerce are still stable.

In the long run, the leading position of children's clothing and the advantages of e-commerce are still stable. The children's clothing industry will continue to benefit from the high artistic atmosphere. Through the self creation, acquisition and agency cooperation, we have already established the comprehensive layout of children's clothing with multiple age groups, multi positioning and international and foreign brands. Based on the leading position of balbala brand, the development of multi brand and future children's wear business segments will be more developed. (Everbright Securities)

Be Meleven (002832)

High end sports and leisure continued prosperity

Company positioning sports business style unique, high quality, with the channel boutiques, experience shops to promote the company's product recognition continues to improve. In the first three quarters of 2019, the gross profit margin of the company increased by 6.66pct to 68.95% compared with the same period last year. The main reason is that the discount rate has been improved under the good sales momentum. In recent years, the field of sportswear shows a trend of high-end and leisure. The company is located in the high-end sports and leisure area, with clear product positioning, and the channel is still expanding. With the improvement of brand strength, the future growth space is broad.